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Bitcoin Price Rallies Briefly On First Anniversary Of All-Time High

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This might be a season of comfort and joy but there is little of that for cryptocurrency traders.

On the one-year anniversary of bitcoin’s all-time high, cryptocurrency markets provided a brief respite but are busy shedding their gains, as of this writing. There was a bump in bitcoin’s price, when it climbed up by 4% this morning. But the original cryptocurrency’s price quickly declined. It is trading at $3,536.32, per Coindesk’s index. The news is slightly better for the overall cryptocurrency market valuations, which have risen by a cumulative $10 billion within the last 24 hours. Currently it is at $114.3 billion.

Why Did Bitcoin Price and Cryptocurrency Market Valuations Rise?

It might be tempting to conclude that the increase in bitcoin price is a reaffirmation of the cryptocurrency’s worth in a testing time during its evolution.

But some have a different take. They say a short squeeze might be responsible for the increase in bitcoin price in the last 24 hours. Short squeezes occur when traders sell their shorts (or shares that they had borrowed to bet on a decline in prices) in order to book profits. The short positions for bitcoin and ethereum rose dramatically during November, when cryptocurrency markets crashed.

A Bloomberg report quotes a report from JPMorgan that states institutional investors are “ditching” bitcoin. Analysts from the firm wrote that participating by financial institutions in bitcoin trading is “fading”. “Key flow metrics have downshifted dramatically,” the analysts wrote, citing order books at exchanges and open interest in futures at Cboe and CME. Bloomberg analyst Mike McGlone, however, has a different take. According to him, institutional interest has increased. “Sharp rallies should be expected as the market is extremely over-sold by most metrics,” he said.

A Bullish Take

Billionaire Michael Novogratz, who has invested about a third of his fortune into cryptocurrencies, also made an appearance on Bloomberg to provide a bullish take. “It was a bubble. It popped. That’s a monster correction (in cryptocurrency markets),” he said.

He pointed to recent developments, such as announcements by established finance companies to develop crypto products and teams and building out of scaling technology for bitcoin, as proof that the long term bullish story for cryptocurrencies remains intact.

“This is a mania built on something real,” Novogratz said. “I am certain we will have a digital store of wealth. I think it will be Bitcoin.